Will Robots Lead to 75% Unemployment?

Humans have a remarkable ability to make life easier through invention. Examples include toilet paper over leaves, cars over a horse and buggy, and drones over piloted planes. However, as is the case with weapons, many advances come with unforeseen and unpleasant consequences, and one such area may be the rise in robotics.

The idea of having a robot to do menial tasks sounds great on the surface -- who doesn't want his or her own personal helper? But some experts warn that those advances could cause unemployment to reach 75%. Still, other experts argue that robots will actually lead to job creation. Here's what you need to know.

By Troy Straszheim, via Wikimedia Commons.

Robots stole my job In July 2011, Foxconn's (NASDAQOTH: FXCNY) founder and chairman, Terry Gou, stated that over a three-year period, the electronics manufacturing giant would increase its use of robots to boost efficiency and combat rising labor costs. While the exact details surrounding this implementation of robots vary, some reports indicate that Foxconn intends to replace 1 million of its human workers with robots over the next few years.

Additionally, in 2011, Erik Brynjolfsson, director of the Center for Digital Business at MIT's Sloan School of Management, and Andrew McAfee, a principal research scientist at the center, released a book detailing how robots will lead to job loss and an increase in unemployment. In the book, they argue that typically, technological advances lead to displaced workers but also create jobs. However, with the rise in robotics and other technology, the jobs created by advancing technology are less than the jobs being lost to that advancement.

As evidence of this trend, Brynjolfsson and McAfee point to the U.S. Bureau of Labor Statistics and its reports on U.S job growth by decade from the 1940s to 2000. "Despite economic growth," they note, "the United States lost jobs in the first decade of the 21st century, in a striking departure from the previous six decades." Instead of seeing economic prosperity lead to reduced unemployment as it did in the past, unemployment increased 1.1% because of advancing technology.

Robots saved my job On the other hand, this past February, the International Federation of Robotics released a study conducted by Metra Martech Limited, which detailed how increasing the use of robotics will lead to more jobs.

The six countries studied -- Brazil, Japan, China, South Korea, Germany, and the USA -- showed that overall, both paid employment and the use of robotics increased in every country except for Japan. Additionally, the study found that though there was a reduction in manufacturing employment in developed countries using robots, in industrializing countries there was a significant increase in both manufacturing employment and robotic use, leading the authors of the study to conclude that robots don't necessarily lead to significant losses in employment.

In fact, the study found that where jobs are too dangerous, where labor costs are too high, and where there is a need for extreme precision, robots directly lead to job preservation and creation because they allow a company to stay in business where it otherwise wouldn't. Further, robots increase the need for support staff and operators. One example is medical-assisting robots such as those made by Hansen Medical and Intuitive Surgical (NASDAQ: ISRG) . Without the use of these extreme precision robots, the surgeries they assist in may not be able to be performed because of the high risk of failure, and death.

Finally, the study concluded that the increased use of robotics indirectly leads to job creation by allowing companies, and the sectors that they occupy, to expand, thus increasing the need for "downstream activity" support.

More pointedly, Aaron Edsinger CTO of Redwood Robotics, and Rodney Brooks, founder of iRobot and now Rethink Robotics, believe that robots will "reinvent and reinvigorate" the economy the same way computers did 30 years ago, and the way the tractor did to agriculture before that.

Should you worry? The robotic impact on unemployment could go either way, but one thing is certain: Robots are becoming more capable every day, thanks to things such as Google's (NASDAQ: GOOGL) Goggles, an image recognition service for mobile devices, and Microsoft's (NASDAQ: MSFT) Microsoft Kinect, which allows robots to take pictures and create 3-D scans of objects, thereby allowing the robot to grasp an object and move it to its appropriate place.

As such, this technology promises to be the wave of the future, regardless of the impact on unemployment. The good news is that by investing in companies that specialize in robotics, today, you may be able to retire thanks to stock profits, if you lose your job to a robot in the future.

Intuitive Surgical is one of the leading medical-assisting robot manufacturers and is poised to prosper from a robotic boom. Plus, Motley Fool co-founder David Gardner, founder of what Hulbert Financial has called the No. 1 growth-stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks -- which includes Intuitive Surgical. He wants to share this approach, along with a few of his favorite growth stock superstars, with you! It's a special 100% free report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains and click here for instant access to a whole new game plan of stock picks to help power your portfolio.

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The problem is not the robots, but the way company will be paying their employees.

Henry Ford noticed that the increase in productivity should be transferred to the salaries and reduced hours of work. Today what we are seeing is the contrary.

Lower salaries with high productivity. This equation will not work. The gap is just increasing....

The most strange is that CEOs and other top executives are getting more and more pay without any real contribution. Take an example of the Financial Industry, the CEOs and top guys lead the whole industry into bankruptcy (2008), but they kept their jobs and huge salaries... Including their bonuses of the past based on the worst possible decisions for their companies!

Nothing like the lobbying power and politicians that cannot care less for the society that they should be representatives.

For now, robotics will be a huge source of economic growth and a wise place to make investments if you can pick the winners in the market. It will create more jobs than our low-tech population can fill. I believe the real short term danger to society however is not as much job loss, but wage inequality. Advancing technology allows the few, to dominate ever larger markets, and reap every larger rewards. Those that can succeed in the new high tech markets will make a very good income, while those displaced by the new technology, will struggle in low wages jobs. Inequality can be a social problem worse than unemployment, and in the US, inequality is already far too high.

In the longer term, over the next few decades, automation will become so advanced, and so cheap, that we will see rising inequality, shift to massive unemployment. Wage inequality will likely grow so large, that much of the population won't be able to find jobs that pay enough to feed them, while others, are so rich, they will find it difficult to spend or invest all their wealth. We are creating an economy, where the wealthy are creating automated industries to provide luxury goods for each other, and the poor, are being left out of the game.

Wealth creation will shift almost completely, from work, to investing. Labor will lose out totally to capital. Wealth will be controlled not by what people can do, but by what they own. When all the food production to feed all the people of the world, only employs 1000 people, then it's not what those 1000 people are paid that matters, but rather, who owns all the land, and patents on seeds and DNA, and the energy sources, and the automated farm machines, and the patents on the machines, and the automated factories building the designing the farm machines. Food will never become free or cheap, becuase it will always require massive amounts of energy, and raw materials and natural resources like land, to produce - and that energy must be paid for by whoever wants to consume the food. The rich will pay to have all those resources dedicated to building obscenely ostentatious luxury items, instead of wasting the energy on food and housing for the poor. The poor, not having jobs, and not owning enough investments to buy them a seat at the table, will revolt, and either win the revolt, or be killed and imprisoned by the rich.

A society where wealth is created by capital, and not by labor, is not a fair, or stable society. The poor have no path to wealth, unless they have wealthy friends and family willing to fund them. Hard work will no longer be part of the equation.

The world economy is already shifting towards a capital based economy because of technology. It's what is causing rising inequality, and rising inequality eats away at the very foundation of our democratic governments as the super rich use their increasing wealth to bend the will of the government in their favor and away from the will and needs of the people.

The "fair" distribution of wealth once guaranteed in society by the need for human labor, needs to be supplanted as wages fade, if our democracies are to survive.

The only replacement for it, I believe, is a socialistic sharing of the wealth being produced by the machines. The higher automation and technology drives inequality, the more socialism and welfare, we must add to our governments to keep the sharing of total wealth fair, for all humans.

I think KurtWelch described this excellently. Almost any job can be done by a machine. It is just a question of when it becomes economical. Because of rapidly growing information requirements, this applies to "knowledge workers" as well like lawyers, accountants and doctors. We are headed towards a concentration of wealth like the Czars knew and we all know how that turned out. Really though this is all part of larger changes effecting humans that relates to changes in disease, genetics, technology, culture and basically every other factor that makes up human survival strategy. I have spent decades trying to solve this as a problem in biological terms, because it is a problem of survival and adaptation. I do see a brilliant future for humans, more brilliant than you would expect, but we must adapt gracefully. Revolutions are so destructive that civilization can be greatly damaged and critical investment lost, but if the great masses are disenfranchised economically, it will get messy. I have worked out a path that will work. Really, except for automation and robots, you probably have not heard of most of the biggest problems we face. Automation and robots (because you can replace a human with a machine) was actually the most difficult problem for me to solve, but I did. Now to find a publisher.

What is NOT mentioned, is that while IT Jobs dropped at the turn of the Century, was also caused by the stup Gov lettog laws pass to ALLOW the Amer Businesses to Ship AMER JOBS overseas such as China and India etc. I have been through multiple Jobs with the same result - you are let go - becuse YOUR SPECIFIC JOB is now being done in INDIA and CHINA. These are ENGINEERING JOBS that I Experienced in this. Also, notice that Customer Support calls now have strong Chinese or Other ACCENTS ? - same there ! Surprise Amer - YOUR Gov has SOLD YOU OUT !

When people are buying a large life insurance policy, doing financial planning or discussing an important legal issue, they don't want to talk to an ATM or a Robot, just saying. Some jobs need the human element.

Years ago science fiction presented a future with robots becoming so pervasive that humans were just an appendage. One of the first novels to address this problem was called the 1952 novel "Player Piano" by Kurt Vonnegut. America has been forewarned about the problem but has ignored it. Unfortunately, this problem will only get worse.